TransCanada Files for Expansion Certificate for North Baja Pipeline

TransCanada Corporation's subsidiary, North Baja Pipeline LLC, has filed an application with the Federal Energy Regulatory Commission (FERC) for a certificate for a two-phase expansion of its existing natural gas pipeline in southern California and the construction of a new pipeline lateral in California's Imperial Valley.

The expansion project envisions substantially increasing the capacity of the existing pipeline and allowing for bi-directional flow of natural gas. Gas currently flows on North Baja Pipeline southward from its interconnection with El Paso Natural Gas Company at Ehrenberg, Arizona.

The proposed North Baja Pipeline expansion links to a corresponding expansion of the Gasoducto Bajanorte line in Mexico owned by Sempra Energy. Together, the expansions will allow for import into the United States of up to 2.7 billion cubic feet a day (Bcf/d) of natural gas supplied from several potential liquefied natural gas (LNG) terminals near Baja California, Mexico, including the Costa Azul terminal that is currently under construction. Shippers have indicated their commercial support for the projects by signing precedent agreements in support of the expansion plan as filed with the FERC.

"We are pleased to be involved in the first major point of entry for regasified LNG on the West Coast of North America," said Hal Kvisle, TransCanada's chief executive officer.

North Baja Pipeline proposes construction of up to 80 miles of 42- and 48-inch-diameter pipeline, predominantly in the existing right of way in La Paz County, Arizona, and in Riverside and Imperial counties, California.

In addition to the expansion, North Baja Pipeline is seeking a certificate for a new 46-mile, 16-inch-diameter lateral to serve the Imperial Irrigation District (IID). The lateral would deliver up to 103 million cubic feet per day (MMcf/d) of natural gas from North Baja Pipeline's mainline to serve the IID's El Centro Generating Station.

The expansion and the IID lateral will be constructed in phases. Phase I would reverse the flow of gas on the pipeline system. Plans call for a new meter station at an interconnect with Southern California Gas Company in Blythe, California, various modifications to the existing compressor station in Ehrenberg, and changes to the existing Ogilby Meter Station in Imperial County. This phase would be in service in late 2007.

Also part of Phase I is the IID Lateral which is expected to go into service in mid 2009.

Phase II, which is contingent upon the continued development and approval of LNG facilities in Mexico, involves the construction of the new line parallel to North Baja Pipeline's existing mainline system and the installation of seven new mainline valves. It is anticipated to be in service in late 2009. If all phases proceed, the total estimated capital cost is anticipated to be approximately US$291 million.

In addition to its FERC certificate of public convenience and necessity (which includes a determination on environmental issues), the project will need various permits and leases from the federal Bureau of Land Management, the California State Lands Commission, and other agencies.